The Kenyan shilling closed at a five-month low of 87.20 to the dollar on Thursday, a 0.3 per cent weakness compared to Wednesday’s close of 86.85 to the dollar.
The Nairobi Securities Exchange was however on the up for two days running.
“We had started the week at 118 points on the Nairobi Securities Exchange. We had predicted about 120 points up by the close of the week and we look set to hit that target. A lot of that has been on the back of increased demand for investors, particularly on the financial services sector,” AIB Capital Limited investment analyst Ted Macharia told CNBC Africa on Friday.
“We have seen the insurance sector previously go up by 1.8 per cent in yesterday’s trading. The banking sector went up by 0.08 per cent, and a noticeably high demand across the banking sector stocks. For instance Kenya Commercial Bank had a demand of three million shares against a supply of 700,000 and we’re expecting that to fuel at least within this month a lot of investor focus.”
Macharia also expects India earnings expectations across select counters such as East African Breweries (EABL) Mumias Sugar Company Limited, Uchumi, Kenya Electricity Generating Company Limited (KenGen) and Kenya Power.
The first half of the year had been particularly difficult for EABL as they were bogged down by a number of financing costs due to their expansion.
The brewery continues to struggle and have had to increase beer prices twice within the first four months on account of the high cost of raw materials.
Similarly, Mumias Sugar’s performance so far has been low, with their move to freeze all investment for expansionary purposes contributing to the poor performance.
Their cane production has mostly been affected by the (Common Market for Eastern and Southern Africa (Comesa) sugar sector protective tariffs, which will expire in 2014.
Despite its strong supply, there has been no substantial appetite for Mumias stock.
The Kenya National Treasury plans to introduce a number of reforms into the country’s banking sector to improve the quality of local financial institutions, which will bode well for a number of banks that are already implementing new internal structures, such as Barclays Bank Kenya.
“Barclays is going under some reorganisation, and that might take some time before we get to see exactly what the new structure will mean in terms of their retail business. Within the short term, most investors are looking at its high dividend yield as an incentive to get on to the counter. Generally the sector has witnessed a lot of strong demand,” said Macharia.